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Supercity IT cost blowout

Written By: - Date published: 7:02 am, March 2nd, 2016 - 70 comments
Categories: accountability, auckland supercity, national, supercity - Tags: , , , ,

Way back in 2009 I wrote about the costs of the Auckland “supercity” integration:

How much is that doggie in the window?

Here’s one significant cost that may well have been underestimated so far – the costs of integrating the disparate information systems of the current councils:

Merging council IT systems to create an Auckland “supercity” will cost the best part of $200 million and could take eight years to complete, according to consultancy firm Deloitte. …


Aucklanders will be paying for this for a long time before they see benefits, if any, and the government is at the very least negligent in being unable to say what the reorganisation is going to cost ratepayers.

By 2011 the cost estimates had more than doubled. I wrote:

Aucklanders to pay for Nats’ negligence

Auckland ratepayers are going to be stuck with a huge bill for the Nats’ failure to properly cost the Supercity merger process. Specifically in this case, the cost of merging the IT systems.

Well now the estimates are in. A unified Auckland IT infrastructure is going to cost more than half a billion dollars over eight years, and $300 million of this has not been budgeted for. Bernard Orsman sets out the facts in The Herald. But the usually moderate Russell Brown steps up and says what a lot of Aucklanders will be thinking:

Someone has to be accountable for this

It will cost the Auckland Council more than half a billion dollars over eight years to build new computer systems to conduct its business — and a staggering $300 million of that had not been budgeted.

Someone has to be accountable for this. And we, as ratepayers, also deserve to know what the authority, the minister, the Department of Internal Affairs, Cabinet and the Prime Minister knew about the real costs that were stacked up by an unelected body last year. And if it transpires that any or all of those parties knew that the costs would be far in excess of what we were told, then there is only one way of characterising what happened.

We were lied to.

National either failed to cost this properly, or hid the costs while trying to make the case for the “cost savings” of the supercity. And now in 2016 we get an update on the state of play from Bernard Orsman:

Council’s $1b in IT costs ‘wasted’

The Super City has spent $1.24 billion on IT since it was formed in 2010 – enough money to pay for the council’s half share of the $2.5 billion city rail link.

Among the benefits, Aucklanders can now register dogs online and access nearly 100,000 e-books, but most online experiences with council are still a grind.

Critics claim the decision by the Auckland Transition Agency to largely build a new system from scratch for Auckland Council was never properly evaluated.

Councillor Mike Lee said the $1.2 billion figure showed a bigger scandal than he had suspected. “There is so much good we could have done with that sort of money but most of it has been wasted.”

So from National’s initial $200 million estimate the actual costs are at least six times higher – and the job isn’t done yet. The real costs significantly alter the economic case that was made for the supercity merger. Was National’s estimate deliberately wrong, or was it just incompetent?

70 comments on “Supercity IT cost blowout ”

  1. tc 1

    It was deliberately understated and ‘plausibly deniable’ that they were aware in true hollowmen fashion.

    The real integrators, the actual teams who do the work, we’re telling them from the get go what the actual cost would be. Ford, Hide, Fisher etc all buried this via plausible deniability.

    Mr Ford ranted and raged if he was bought any status report that wasn’t all green boxes so the minions learned early not to indulge in hard evidence of the impact of nacts woeful budgeting and timescales imposed.

    Contracts were ended when money ran out with tasks incomplete from as early as 2010.

    Chickens meet roost as years later the failure to complete those tasks hangs around ratepayers necks now in another typical NACT exercise in systems deployment.

    like their novopay shambles this one keeps rolling on.

  2. Incognito 2

    The iron law of megaprojects, is they are over budget, over time, over and over again.

  3. One Anonymous Bloke 3

    Sheer incompetence, and what else could anyone ever realistically expect from Rodney Hide and the National Party?

    The things they pay lip service to (whilst keeping very quiet about the things they believe) have no basis in reality. This is the inevitable consequence. The only reason they got elected in the first place is electoral amnesia.

    • Macro 3.1

      ^This

    • International Rescue 3.2

      Or you could blame a left wing mayor who has been in charge for the past 5 years and on whose watch this massive stuff up occurred.

      • One Anonymous Bloke 3.2.1

        Why are right wing commenters always so ignorant of the relationship between elected representatives and CCOs? Did you simply just not bother informing yourself before blathering?

        Who appointed the members of the Auckland Transition Agency, and are National’s gimps going to display a single scrap of personal responsibility? Fat chance.

        • International Rescue 3.2.1.1

          CCO’s are accountable to who? That’s right, the Council. Your left wing mayor has been out of his depth.

          • One Anonymous Bloke 3.2.1.1.1

            Yes, a more competent mayor would have gone back in time to make sure the ATA got its sums right 🙄

            • saveNZ 3.2.1.1.1.1

              Yeah right! When the councillors told Port’s of Auckland to stop work and give back the harbour – the Ports of Auckland told them ‘Stuff off’.

              Sound normal or more like Pycho right wing manic CEO’S in charge of our CCO’s. Not accountable to shareholders i.e. the ratepayers of Auckland. Ports of Auckland are a joke – from their concrete silos, to their employment records, to their F-Off attitude to anyone – they literally are showing us as the banana republic they hope us to be.

            • International Rescue 3.2.1.1.1.2

              Yes! Or not allowed the scope to include e-books.

              • Sacha

                e-books? You’re grasping at straws. Libraries IT was already integrated before the super-city amalgamation, and that part of their systems would not be expensive either. NewCore is the problem.

                • International Rescue

                  From the article:

                  “Among the benefits, Aucklanders can now register dogs online and access nearly 100,000 e-books, but most online experiences with council are still a grind.”

                  Can NOW…

                  • Sacha

                    It’s a tiny non-complex part of Council’s operations. Tiny.

                    There’s more than enough angles in this to hang justified outrage from, but that’s really not one of them.

      • Tc 3.2.2

        Yawn, is that the best you can do ?

        You need to go back to tr&@ll uni and redo the paper on ‘using selective facts to frame your meme’ go on its not that hard.

      • Draco T Bastard 3.2.3

        No you couldn’t. It was this government that set up the super city and thus defined what was needed to be done.

        • International Rescue 3.2.3.1

          Do you have any evidence that it was ‘this Government’ that stipulated the need to access 100,000 e-books? For the record I’m in Auckland and the super-city is and always was a viable concept poorly implemented. Brown knows how to spend other peoples money. And not much else.

          • Draco T Bastard 3.2.3.1.1

            Do you have any evidence that it was ‘this Government’ that stipulated the need to access 100,000 e-books?

            Ah, typical RWNJ – faced with reality they divert to an extreme.

            The National government defined the criteria of the entire city and thus defined what needed to be done as far as IT was concerned.

            For the record I’m in Auckland and the super-city is and always was a viable concept poorly implemented.

            And I’m in Auckland and always thought that it had some pros and cons and consider that closer working relations between the councils for most of it while taking the commonalities between them and putting them into single entities that the councils then controlled would have been a better idea.

            Brown knows how to spend other peoples money.

            That’s just it – it’s NATIONAL that has caused the cost blow out through their actions. Brown has been limited in what he can do by what NATIONAL did and that includes having to increase rates to cover for NATIONAL’s stupidity.

            • International Rescue 3.2.3.1.1.1

              “The National government defined the criteria of the entire city and thus defined what needed to be done as far as IT was concerned.”

              The devil is always in the detail. And the left love adding to the detail. Who asked for 100,000 e-books on line?

              “That’s just it – it’s NATIONAL that has caused the cost blow out through their actions. ”

              Well that’s you opinion. Not much in the way of evidence though.

              • Draco T Bastard

                All the evidence is there and shown in this thread.post – you’re ignoring it as RWNJs do when they have to defend their team leaders from their own actions/decisions.

                • International Rescue

                  The article consists of a quote from a previous blog. There is no ‘evidence’ of any culpability by anyone. Brown and the Auckland Council have been managing the city, not the Government (of either stripe!).

          • One Anonymous Bloke 3.2.3.1.2

            spend other peoples money

            Polly wanna cracker?

            • International Rescue 3.2.3.1.2.1

              It is ‘other peoples money’. That’s the whole point of this discussion. We entrust our council and mayor to spend our rates wisely…they haven’t.

              • One Anonymous Bloke

                Keep telling yourself that. Anything than admit the possibility that it’s Rodney Hide and the National Party’s personal responsibility. Perhaps you voted for them, in which case you have to avoid your share, too.

                • International Rescue

                  Who runs the city? Who has run the city since the beginning of the life of the super-city? Not the Government.

                  • One Anonymous Bloke

                    Who has the time machine to fix the monumental incompetence (or, given the effect on the economic case, was it corruption?) of the National Party and Rortney the Trougher?

                    You can’t have a cost blow-out unless you’ve underestimated costs in the first place, but a factor of six! No wonder Labour always manages the economy better than this innumerate shower.

                    • International Rescue

                      You haven’t provided any evidence the cost was under-estimated. BTW you might want to look up the term ‘scope creep’. It makes your comment “You can’t have a cost blow-out unless you’ve underestimated costs in the first place” evidence you are just a dullard.

                    • One Anonymous Bloke

                      Keep telling yourself that dear.

    • Grindlebottom 3.3

      +1

    • Draco T Bastard 3.4

      I believe that the RWNJs engage in what I call’wanting’. They want the price to be low and so they believe that the price is low.

      They’re wrong as normal.

  4. Penny Bright 4

    Where were the internal and external audits?

    What was the role of the Office of the Auditor-General (OAG) regarding the ‘third party’ auditing of the merging of the previous Councils’ IT systems?

    Time to ‘open the books’ and allow for far more public scrutiny of the spending of public monies by Auckland Council and Council Controlled Organisations (CCOs)?

    Time for the proper implementation and enforcement of the ‘Public Records Act 2005’?

    Time for an Independent Commission of Corruption in New Zealand?

    I think so.

    Penny Bright
    2016 Auckland Mayoral candidate.

    • Bob 4.1

      How are they going to pay for it all if Auckland citizens don’t pay their rates?
      Those bloody 1% that do anything to avoid paying their fair share to society…

      • Penny Bright 4.1.1

        I will pay rates when ‘the books’ are open, and I can see exactly where rates monies are being spent.

        When I’m elected Auckland Mayor – ‘the books’ WILL be open, and the Public Records Act 2005 WILL be properly implemented and enforced.

        How can you have transparency or accountability without proper written records. available for public scrutiny?

        Penny Bright
        2016 Auckland Mayoral candidate.

        CITIZEN – not SHEEP or SLAVE!

    • Tc 4.2

      Auditors do as they are told, they are paid consultants who want return business. Its another comfy old boy network.

      Enron, worldcom, feltex, dick smith etc etc plenty of other examples about.

      Follow the money…..alot leads to deloittes.

  5. Nck 5

    Maybe the corporate IT co’s will sue the Auckland people because we can’t pay. TPPA right?

  6. esoteric pineapples 6

    The true cost of major white elephant projects is always hidden or played down so that those who want them to go ahead get their way. This is especially the case where public money is spent. It’s easy to spend other people’s money for your own benefit for these types of people. The same thing is happening with some of the dam projects.

    • Tc 6.1

      Yup like the true cost of jk’s vanity flag distraction project would be well over 35m

  7. Jenny Kirk 7

    I’m not at all surprised. When has the amalgamation of local councils (which has happened in the Auckland region at least three times since the 1970s) ever been an economic cost-saver ?
    There ARE advantages to local councils working closely together for the good of the whole region but this need not have encompassed total amalgamation into the one – which in Auckland’s case has become an almost-out-of-control monstrosity.

  8. John Shears 8

    Why are we surprised?
    After a carefully selected group of commissioners spent several years determining the most practical steps to take to create a single city from the previous independent local bodies and publishing a detailed report of their findings and the steps to be taken to achieve a satisfactory result. This after considerable public consultation.

    Sounds good? Well we will never know as their scheme was chucked in the rubbish bin ( hopefully recycled) and the National Government
    appointed Rodney Hide , the drinker of tea with the PM, and Act Party Leader to come up with an alternative plan which he did in about 6 months , go figure.!!!!!
    The overrun on IT costs is not the only problem, although is perhaps the most costly. My interest at the time was in relation to the supply and reticulation of Potable water , Sewerage and Sewage treatment and stormwater discharge having spent several years on citizens committees set up by North Shore City to update the Rosedale Treatment Operation , plan for the associated infrastructure upgrades required and do the same for stormwater to achieve the best result to ensure that the environment was protected as well as could be achieved.

    The Hide plan?? ignored the fact that all three waters need to be
    handled by a single agency and allowed Watercare to get rid of stormwater, this could be another cost in both dollars and damage to the environment, the old Auckland City has a long standing problem of damage from combined sewage/stormwater systems.

    • Sacha 8.1

      Hide fronted the government’s plan, but Nat Ministers like John Carter, Joyce and English were heavily involved in shaping it. Convenient to have someone else to pin it on in case it turned to custard – and a nice ego stroke for Rodders, to boot.

    • ropata 8.2

      Not only did NACT bully boy Hide throw the original plans in the rubbish, the NatCorp™ plan was rushed through at ridiculous speed with no thought for the fallout, and no doubt the IT back office was left to pick up the pieces.

      The old triangle “quality, speed, cost: pick 2” applies here with the speed factor completely untenable.

      Auckland councils have traditionally had serious culture problems and it looks like this whole super city experiment has done nothing to resolve the rorts and cronyism and internal politics. Cultural problems come from the top

  9. One Two 9

    Merging council IT systems to create an Auckland “supercity” will cost the best part of $200 million and could take eight years to complete, according to consultancy firm Deloitte. …

    Deloitte were lying about the cost, and they knew it

    The estimated timeline was somewhat more realistic, but the cost estimate of $200m was complete deception

    Auckland Council have also outsourced contracts for Data Center, infrastructure management as well as other IT service contracts

    To give a simple example: Building of a Virtual Server (base only) cost approximately $2k internally. Same server cost approximately $9k under the outsourced contract

    Senior Managers in the department had a major falling out with the Head of IT in 2013, a number of them resigned. The fall out was over the outsourcing of services with cost involved, which represented tens of millions worth in service and maintenance contracts, alone. The numbers emphatically supported keeping the services internal, yet the external contracts were signed

    The Head of IT, Mike Foley was walked out the door in November 2015

    • RedLogix 9.1

      The numbers emphatically supported keeping the services internal, yet the external contracts were signed

      Same experience here. Losing control of critical functions and associated costs is always a mistake. One that right wing managers seem keen to make over and over again. I presume it’s because being ethically corrupt shits they are usually getting some kind of kickback.

      Contractors have a valuable and useful place … but only when you have the internal resource to monitor and maintain control over their day to day work.

    • Sacha 9.2

      “Mike Foley was walked out the door in November 2015”

      That took far too long to happen.

      • Tc 9.2.1

        He held on as long as he could so the trail grows colder with every passing month as Ford and Hide arent around to help him anymore.

  10. saveNZ 10

    My view is the true right wing agenda of the supercity was to suppress democracy and sell off the assets to their cronies. It was to create a ‘business’ structure with CEO’s. CFO’s, CIO’s etc on high salaries, all pushing an agenda that is totally out of touch with what their ratepayers want and expect.

    Central control cripples large councils. Under Supercity council units have become powerful fiefdoms with zero accountability as the mayor and councillors and CEO’s etc are so far removed. Often these council fiefdom managers and underlings are incredibly stupid, Naive, drunk of power, unable to make sensible decisions or all of the above and control millions in their budget AND don’t worry about any overspend AND can wreck others lives because of it. Think Kaipara council and their white elephant ‘development driven’ wastewater system. People were forced out of their homes because of it.

    We also have the planning division of council out of control as well. They are so incompetent that their own submission was thrown out on the unitary plan. The tried to steal the harbour from Aucklanders, cut down ancient trees and forcing zoning changes on behalf of developers and the National government. They have not created adequate public transport along with central government and clogged up all of Auckland with roadworks for new roads creating further congestion. They want to create CBD in the suburbs for some personal unproven agenda that affects the lives of thousands of ratepayers, homeowners and renters who they publicly ridicule or use to drive their agenda through.

    The IT is just an example of how this costly mess of Supercity is panning out. The IT fiefdom division of the Auckland council have spent a billion. The CEO and so forth have approved it all. What the council IT decided does not work, even if they get it working it is a white elephant that will continue to drain money forever from ratepayers.

    Councils are not businesses. They are social entities and should be run like them. Rates are mandatory to be paid, that is not the same as a business which does not have mandatory payment. Therefore the councils should be 100% accountable to the people as they are forced to pay for them.

    • Penny Bright 10.1

      Looking forward to your vote Save NZ!

      😉

      Kind regards

      Penny Bright
      2016 Auckland Mayoral candidate.

      • saveNZ 10.1.1

        @Penny – I’m not endorsing you, (although on many issues you are on the right track). I’m an undecided voter.

  11. NZJester 11

    National has always claimed to be the party that knows best when it comes to controlling the New Zealand Treasury. But again and again they waist money on vanity projects and wasteful ideology driven changes.
    Labour governments have managed to always increase spending on essential services while paying down our international debts, Yet National governments are always borrowing while cutting the funding to essential services.
    Privatization it claims will save the NZ tax payer money, but when you look at the things that have been privatized they are costing us more while offering services sub standard to what they previously offered.

  12. Bob 12

    “Merging council IT systems to create an Auckland “supercity” will cost the best part of $200 million and could take eight years to complete, according to consultancy firm Deloitte. …”

    How do we know this isn’t accurate? Deloitte clearly studied the costs of merging the existing IT infrastructure, the issue lies here:

    “Critics claim the decision by the Auckland Transition Agency to largely build a new system from scratch for Auckland Council was never properly evaluated.”

    No shit Sherlock, you don’t get a quote to do renovations to your house then know the whole thing over, start from scratch and wonder why it has cost more!
    The ATA was created by Government, so who in Government is responsible for these muppets?

    • Penny Bright 12.1

      http://www.ata.govt.nz/web/cms_ata.nsf

      Auckland Transition Agency (ATA)

      LOTS of background info here …..

      Penny Bright
      2016 Auckland Mayoral candidate.

      • Bob 12.1.1

        Thanks Penny,

        So the ATA was setup, ignored the Deloitte recommendation to merge IT systems at a cost of $200M, decided to build a new platform for $500M that wasn’t budgeted for, they got disbanded in October 2010 after setting the wheels in motion for the new system, left it too…who knows to project manage, budget blows out to $1.2Bn and no-one is left to take responsibility for it?

        The ATA was appointed by the Government, the extra $300m should come out of the central Government budget straight away, then raise an inquiry into where the other $700m in cost blowouts has come from, if it was council incompetence council wears it, if it was ATA incompetence central Government wears it.
        It won’t be popular, but they need to suck it up and live with their appointments.

        • Draco T Bastard 12.1.1.1

          I think that the extra billion should come out of National Party coffers. They’re the ones who are ultimately responsible.

          • Bob 12.1.1.1.1

            That’s a little drastic, they did put the ATA in place, but the ATA have been gone for more than 5 years, who has been project managing this blowout in the meantime?

            • Draco T Bastard 12.1.1.1.1.1

              More National Party stooges by the look.

              • Bob

                So the ‘Decade of Deficits’ Labour left us in should be taken out of their own coffers even though they are no longer in charge?

                • Expat

                  Better check your history, or provide a link to prove your statement.

                • Draco T Bastard

                  Projections aren’t reality.

                  On the other hand, National has had us in nearly a decade of deficits and there doesn’t seem to be any end of them in sight.

                  And the huge blow out on the IT in Auckland is directly attributable to National’s decisions to throw away a carefully considered plan to amalgamate Auckland and replace it with a half-arsed plan put together in 5 minutes by Rodney hide and then putting in a dictatorship that ran roughshod over carefully considered planning.

                  National just does things on the assumption that things will turn out right and then manages to avoid any sort of accountability.

  13. Hami Shearlie 13

    Why not put David Seymour on the hot seat over this (he’s now involved in a grubby little mess involving Landcorp)
    – he’s now the leader of Act and it was an Act MP, Rodney Hide who created this whole mess, he was given this job by guess who – Jonkey! They no doubt thought the Unitary Plan would be in place by now, and that the Councillors would be taking the flak – unfortunately the ratepayers have fought back and are up in arms – many many of them from the leafy suburbs who all vote National!

    All the assets of Auckland were to be sold to the rich mates of the Nats and Act parties by now – such a shame that the little people have fought back and have stalled all these secret plans! I wonder how many National and Act members were planning to buy shares in things like the Ports of Auckland etc?

    • saveNZ 13.1

      Like Dick Smith, it is the corporate raiders who would be getting rich off ex-council assets, stripping them, packaging them up for shares, making eye watering profits and then flogging them off, when surprisingly after their ‘business efforts’ it becomes bankrupt 1 year later, the ‘mums and dads’ share investors (joke), or more like pensions funds that bought them as well as the individual Nat n Act members lose their money, the employees lose their jobs and hey, that is Neoliberalism in action. It is not even helping the rich – it is for the mega rich 0.0001 it works for. People like John Key, share trader, known as the smiling assassin even before he became a politician!

  14. Sacha 14

    Does someone have a credible source (ie: not Orsman) for the IT spend, and the proportion of capital and operating costs within it?

    Any large information-centric organisation will spend a lot running IT systems on top of whatever they cost to put in place.

    • Tc 14.1

      Here lies another issue as:
      Theres money to be made still by many vested interests
      nz is a very small market with few large projects
      Nact are vengeful with long memories

      Finding someone willing to put the real numbers out there and risk being marked is a challenge.

  15. AB 15

    No surprises – when the efficiency and cost-saving benefits of a super-city were first pimped by people like HIde years ago, I just roared with laughter. I said at the time it would cost more, and IT companies would be in clover for years.

    Large IT projects are extremely hard to estimate up-front, especially where there is any significant amount of new software development or re-development. You always expect early estimates to be wrong – it’s merely a question of by how much. But what you should expect from competent professionals is that for any up-front estimate they get the order of magnitude about right. Then you can make a call on whether you want to walk away, or do more work to refine your goals and priorities.

    IT projects where a managerial class think there “must be” savings and efficiencies by standardising ‘similar’ operations that occur in multiple organisations onto a single software platform are extremely scary. Even more so if the multiple systems have been extant for a long time. Your managerial class have only the most superficial understanding of what these operations actually do. “How hard can it be”, they say, “to do xyz?”. But those disparate systems that have been around for years are all full of their own peculiar edge-cases and exceptions, and workarounds. And you have to port all that legacy data to the new system as well, and probably do immense clean-ups and transformations on it in order to port it.

    All this is so obvious that you would think that anyone with half a brain would approach a super-city amalgamation with extreme caution and doubt.
    But no, the illusory benefits were ludicrously over-hyped – and one can only conclude that what drove it was ideology, a desire to see greater Auckland brought under the control of the ‘right sort’ of people. And the ‘right sort’ of people means the Auckland business elite, not a small and messy democracy where little people turn up at the booth to vote for the Mount Albert Borough Council or some such.
    So we have both money wasted AND a democratic deficit – all sold on a pack of lies called “efficiency”.

    • Draco T Bastard 15.1

      +1

    • RedLogix 15.2

      Or to put it another way:

      Why is it the case that in order to become a successful manager in the UK that one must embrace parochial miserableness, abject meanness and byzantine nastiness?

      More to the point, why has management in the UK become a politically barren, ethically bereft and dehumanising game of intense mediocrity?

      In recent interviews with managers, leaders and executives throughout the UK, I was informed on more than one occasion that the goal of most management – public or private sector – is the attainment of absolute mediocrity. Indeed, that the ideal natural-state of the business and its processes is one of permanent instability, stress and inefficiency. All of which is hidden underneath a barely discernible veneer of fake professionalism, dubious legality and prissy civility.

      One of the curious aspects of contemporary management life in the UK is that intense inefficiency, boloney-based disorganisation and paranoia-fuelled abuse is seen as an aspirational goal, and that highly-ineffective, naturally-erratic and constantly-engaged managers don’t have time to think, never mind have time to organise themselves in order to be truly productive in any rational sense.

      http://goodstrat.com/2016/03/02/lions-lead-by-donkeys-intense-mediocrity-in-uncool-britannia/

  16. adam 16

    This is how anti-democratic forces operate.

    Why is anyone surprised.

    The super city is all about destroying democracy!

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